Financing for Floating Homes in Marin and the Bay Area

Financing
for floating homes is not within my usual bailiwick, however numerous inquiries
pushed me to do some research and I thought I'd post some information on this
topic for those in need.

Even
in past years when home financing was far more liberal, credit for purchasing a
floating home was difficult to find. In today's challenged lending environment,
non-mainstream loans have largely vanished and I was able to find only one
lender offering financing for floating homes in the Bay Area: Financial
Benefits Credit Union (FBCU). With just one player in the market, loan
offerings are understandably limited and borrowers are likely to find
themselves relegated to either a 7-year fixed or a 7-year adjustable loan. Both
loans are based on 25-year amortization schedules, but balloon after the
initial 7 years. Current rates on the fixed loan are in the neighborhood of
7.25%, starting at 1.25 points in cost.

Here
are some of the major parameters of FBCU's loans:

Loan limit of $300,000.
Significantly larger loans available with board approval at an additional
cost of ½ point.

Financing to 80% of
purchase price.

Loans are due after 7
years, though FBCU will often adjust the interest terms to market price
and extend the loan.

The
other significant factor to keep in mind with floating homes is that they are
considered personal property. Purchases are not recorded and are instead
registered with the Department of Housing and Community Development (HCD) in a
process that is similar to a transfer of title through the DMV. For this
reason, buyers execute a security agreement rather than a deed of trust. The
buyer is named the registered owner of record and receives a Registration Card
and the lender is named the legal owner of record and given the Certificate of
Title (similar to a bank holding the pink slip to a car). Although they are registered
as personal property with the state, buyers still pay annual property taxes
based upon the assessed value of the floating home.

Buyers
are not required by law to open escrow with a title company, but the lender
will want a third party to handle the transaction. The loan is considered a
consumer loan, so there is no title insurance. The HCD provides the required
title search and escrow prepares and submits the transfer application and
required fees to the HCD. In turn, the HCD issues the title and registration to
the new owner.

There
are very few escrow officers specialized in floating home transactions. One
highly recommended escrow officer to consider is Jill Woods at Stewart Title in
Santa Rosa. Jill may be contacted at 707-526-2000 or, via email, at jdwoods2@stewart.com.